Analysis: Epitaph for a Commerce Secretary

WASHINGTON, Nov. 10 (UPI) -- Don Evans, who announced his resignation as U.S. Commerce Secretary on Tuesday evening, was a leading member of a Bush economic team that has presided over record trade deficits and budget deficits, but not so far over the sharp economic downturn that seemed inevitable after the bubble of 1996-2000.

It's not quite clear what a Commerce Secretary does; indeed the Commerce Department itself was slated for abolition in Newt Gingrich's 1994 "Contract with America." To the extent that it is supposed to promote exports, the department has been notably unsuccessful under Evans; the trade deficit, currently running at $650 billion per annum, is 50 percent higher than when George W. Bush took office, in spite of a dollar that has been quite weak against its major trading partners.

Protecting against imports, the opposite side of the essentially mercantilist definition of the Commerce Department's purposes, has regrettably been rather closer to Evans' heart. A Texas oilman with contacts in the steel industry, he was responsible for the punitive tariffs imposed on imported steel in 2002, although he also accepted their removal in late 2003 when rising steel prices had rescued the U.S. steel industry and the tariffs seemed likely to cause the World Trade Organization to act against the United States. The Commerce Department has also been active in pursuing anti-dumping actions against Chinese textile goods, but to be fair has so far refrained from attempting to re-impose textile quotas, scheduled to be abolished on January 1, 2005.

Perhaps Evans' greatest value to the administration has been as friend and confidante to Bush, and as negotiator with recalcitrant Congressmen when Bush needed to pass elements of his economic program, in particular the 2001 and 2003 tax-cut legislation. Both roles are of considerable value in any administration, and Evans' diligence in them may well be missed.

But in the end, Evans was just one example of the curious lack of stature of Bush's economic appointments. A Harvard MBA himself, Bush must realize the importance of both economic issues and of having officials of weight and capacity in the leading economic positions. Commerce, for example, is by no means inevitably a political dead end. Ronald Reagan appointed as Commerce Secretary Malcolm Baldridge, probably the most admired Commerce Secretary of recent decades, and inspirer of the Malcolm Baldridge National Quality Awards, one of government's few really useful nudges to the private market. Further back, Herbert Hoover was a much-admired Commerce Secretary, appointed by President Warren Harding, who parlayed his successful Commerce experience into a disastrous Presidency.

On the Democrat side, President Bill Clinton's Commerce Secretary, Mickey Kantor, was a strong, albeit protectionist force in the administration, in spite of Clinton's appointment of even stronger figures, Robert Rubin and Larry Summers, to the institutionally rival Treasury Department.

Bush, unlike Reagan and Harding, seems not to be capable of appointing and keeping top quality people, at least in economic areas. His Treasury Secretaries, Paul O'Neill and John Snow, have lacked both intellectual stature in the economic field and political clout. Glen Hubbard, former head of the Council of Economic Advisers, left office after only 2 years, as did Mitch Daniels, head of the Office of Management and Budget (and now Governor-elect of Indiana) and Larry Lindsey, Chief Economic Adviser. This is not a good track record. Only Special Trade Representative Robert Zoellick has both stayed for Bush's full first term and accomplished something significant while there, negotiating bilateral trade treaties with a number of countries, including notably Singapore, Jordan, Chile and Australia. Without outstanding weaknesses, Evans nevertheless added relatively little to the Bush economic team, and to the extent he had an input, it appears to have been in an economically damaging protectionist direction.

The Commerce Secretary's main job over the second Bush term will be to do something about the U.S. payments deficit, to the extent such a thing is possible. Should the deficit problem remain unresolved, the likelihood must be of a currency crisis of catastrophic magnitude at some stage, such as the Asian central banks that currently fund the U.S. budget deficit suddenly deciding they don't want any more dollar paper. A super salesman along the Kantor lines would thus be an attractive possibility, although a Baldridge-style determination to improve the quality and export attractiveness of U.S. goods would also be a desirable characteristic.

Given the difficulties the U.S. economy faces, resisting protectionism will be a major challenge for the re-elected Bush team. Here the job of the Commerce Secretary is not to open up world trade -- that is Zoellick's job -- but to resist protectionist siren songs from U.S. industries adversely affected by imports. Given the fall in the dollar, actual and prospective, there should be little excuse for U.S. industry to complain about being undercut by foreign competition, unless it is genuinely uncompetitive, in which case both the U.S. and world economies would benefit from its closure. However, if there is any kind of recession, or any kind of difficulty with the balance of payments deficit, the call for protection may well become overwhelming. Evans has been too quick to allow the steel lobby to gain protective duties, and the textile lobby to impose "anti-dumping" duties on China.

The principal qualification for a Commerce Secretary must thus be a strong intellectual commitment to a free world trade system, together with the political power and strength of character to resist industrial attempts to bring political pressure to bear. Ideally, a former Congressman or Senator with a dedicated intellectual commitment to free trade would fit the bill -- one thinks of former Senator Phil Gramm or former Speaker Newt Gingrich, but there must be others.

Another former industrialist, like Evans, O'Neill or Snow, with no great intellectual commitment to free trade and no great political power in Congress, would seem a less attractive possibility.

As for Evans, he will leave only a modest legacy, only a modest gap in the ranks of the Bush administration. Those disappointed with last week's election results, or others skeptical about the Bush team's economic policy, should remember the epitaph on Frederick, Prince of Wales, killed by a cricket ball in 1751 (for best effect, you might think of Bush as the father, Treasury Secretary John Snow as the sister and maybe Secretary of State Colin Powell as the brother...)

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